Proposed State Authorization: Dramatic increase in federal control of distance ed

The Department of Education (DOE) released their proposed State Authorization regulations this week as part of the negotiated rulemaking process that seeks to replace previous rules struck down by courts in 2011. While the new process is more transparent than before (which was the basis of the court rulings), the proposed rulings would represent a dramatic increase in federal control of distance education and compliance burden for institutions. Greg Ferenbach from Cooley LLP noted these changes in a listserv discussion at WCET [used by permission from author, emphasis added]:

What I don’t think many folks appreciate … is this proposal would be a huge change from the way things work today. From a quick read, it appears as though the proposal would require all states to authorize distance ed (with no exemptions for accreditation, etc.). Basically, this would be a mandate to either obtain specific state approval or participate in reciprocity as a condition for continuing to offer distance education with federal aid.

Note that this is quite different from the last rule, which only mandated that you need to meet state requirements, if any, and thus it appears to impose a huge new burden on states and institutions. Think at least double.

The gist of State Authorization is to force distance education and correspondence programs to comply not only with their home state regulations but to also comply with regulations for any state of residence for students. While most readings of relevant rulings indicate that distance programs already have to comply with student’s resident state regulations, the compliance has been uneven – in a survey reported a year ago 32% of programs had not even applied to other states for authorization and many institutions are starting to not accept students from certain states. The federal ruling would formalize this compliance and tie it to Title IV federal financial aid.

The good news is that the new rulings would formally recognize and support state reciprocity agreements as a means to achieve authorization. The primary mechanism would be the State Authorization Reciprocity Agreement.

The bad news is the dramatic change in tone and expansion of federal power in the ruling. In the Chronicle story, both Greg and Russ Poulin were quoted on this subject.

Gregory Ferenbach, a lawyer with Cooley LLP who has followed the rule closely, said that change would require states to regulate online learning “whether they want to or not.” Currently, three-quarters of states don’t oversee purely online programs at all, he said.

“The whole federalism principle of leaving it to the states to regulate this activity certainly goes right out the window,” he said.

Russell Poulin, a negotiator, said he was “disappointed by the perceived change in tone from the department.”

“The original regulation was elegant and trusted the states,” said Mr. Poulin, who is deputy director for research and analysis at the Western Interstate Commission for Higher Education’s Cooperative for Educational Technologies. “The proposed language is prescriptive and will take great effort by the states to comply. Institutions that are currently approved in some states will need to reapply.”

Mandate on States

DOE released an issue paper to help explain the changes, and WCET has posted both the issue paper and the proposed ruling on its site. Emphasis added in all bold text below.

The original language from §600.9(c) that was vacated by the courts:

(c) If an institution is offering postsecondary education through distance or correspondence education to students in a State in which it is not physically located or in which it is otherwise subject to State jurisdiction as determined by the State, the institution must meet any State requirements for it to be legally offering postsecondary distance or correspondence education in that State. An institution must be able to document to the Secretary the State’s approval upon request.

In essence, this is the approach where DOE “trusted the state” just telling institutions to comply where states require. There was no direction on what the states must do. The new ruling would replace these 75 words with 1,086 words of new requirements. Under the proposal the DOE would tell every state that it must regulate distance education and tell them what these regulations must include.

The new language for §600.9(c):

[The new condition is for an institution offering distance education out of state] is considered to be legally authorized in that State if–

(i) The State has a process to review and appropriately act in a timely manner on complaints concerning the institution, including enforcing applicable State law, and has the final authority to resolve complaints and enforce applicable State law; and

(ii) The institution meets State requirements that it be approved or licensed by name–

Furthermore, any previous exceptions that allowed institutions to avoid explicit state authorization due to accreditation or time in operations would be disallowed:

(7) An institution is not considered to be legally authorized to offer postsecondary distance or correspondence education in a State if it is exempt from State approval or licensure requirements based on accreditation, years in operation, or other comparable exemption.

While the federal government is now telling the states what they have to do to regulate distance education, the proposed rulings specifies that the federal government itself can authorize schools and the states must accept this authorization (this is my reading – someone correct me if I am wrong).

Proposed §600.9(c)(8) provides that an institution authorized by name to offer distance or correspondence education beyond secondary education by the Federal Government, or under certain conditions, an Indian tribe, is considered to be legally authorized.

The Net Effect

As Greg mentioned in his comments to the Chronicle, some three-quarters of states that previously did not regulate distance education would now be forced to begin regulations, and given the new conditions, several states will have to revise their regulations.

Keep in mind that this is a proposed ruling that will go through further negotiations starting next week, so these rules do not yet apply. If these rules go through however, the compliance requirements for both states and distance education programs will increase dramatically, and the power in education policy-setting will further shift from states toward the federal government.

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About Phil Hill

Phil is a consultant and industry analyst covering the educational technology market primarily for higher education. He has written for e-Literate since Aug 2011. For a more complete biography, view his profile page.